Meet with work group Develop project milestones to discuss project approach Brief crM managemeni
*
i
Write draft rule
and preamble
Discuss comments on
draft package with work group
1
Communicate with
EPA Regional Offices, Develop and
OK
ot
IB, and others
jtside Agency t open docket ' ͣ 1 01
66 4.1 The Federal Register Publication System
Congress established the Federal Register publication system as a method of informing the public of the
regulations affecting them. This central publication system effectively manages the regulations and other docioments
issued by federal departments and agencies. The Federal Register Act (44 U.S.C. Chapter 15), which became law on July 26, 1935, established a uniform system for handling agency regulations. The Act specifically provided for:
(1) submitting documents to the Office of Federal Register (OFR); (2) making documents available for public inspection;
(3) publishing documents in the Federal Register; and (4)
after a 1937 amendment, codifying rules in the Code of Federal Regulations (CFR).
The Federal Register system is composed primarily of two major publications: the daily Federal Register and the
annually revised CFR. The two publications together provide
a current version of all federal agencies' regulations. The
Federal Register is a daily publication for handling
Presidential and federal agency documents as they are issued. The CFR is updated once a year to codify all the
regulations of the various federal agencies that appeared in the Federal Register during the previous year.
Publication in the Federal Register provides official
legal notice of the existence and content of a docximent.
ͣ
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67
which became law on June 11, 1946, added significant dimensions to the Federal Register publication system, including giving the public, with some stated exceptions, the right to participate in the rulemaking process by
commenting on proposed rules.
Each document that is published in the Federal Register is assigned to a specific category for publication. Format and content requirements differ for documents in each
category. One such category contains rules and regulations, documents that have general applicability and legal effect. The terms "rules" and "regulations" have the same meaning within the Federal Register publication system. The
Administrative Procedures Act defines a rule as "...a
statement of general or specific applicability and future effect designed to implement. interpret. or prescribe law or policy or describing the organization, procedure, or
practice requirements of an agency... "^^
Rulemaking (or "regulation development") is defined as "...the agency process for formulating, amending, or
repealing a rule."*^ The general provisions is an example
of a rule that is substantive (or legislative), i.e, it is being issued by EPA to implement a statute. Rules may also be issued to interpret and clarify previous statements or to make statements of policy, i.e., statements issued by an agency to advise the public in advance of the manner in which it proposes to exercise discretionary power.
68
4.2 The Notice of Proposed Rulemakina and Rulemakinq Docket 4.2.1 Contents of the Notice of Proposed Rulemaking
The publication of a proposed rule in the Federal Register officially begins the rulemaking process by
notifying the public that a federal agency or department is
anticipating a rulemaking proceeding.** The Notice of
Proposed Rulemaking (NPRM) is the first published version of the regulation. The key parts of the NPRM are: (1) a
statement of purpose; (2) a description of the problem
(e.g., the environmental or health risk); (3) a description of the solution (e.g., the environmental standards to be set); (4) the anticipated public benefits (near and long term); (5) the required technology, or other means, to
effect the solution; (6) the costs attendant to the
solution; (7) the potential economic effects; (8) the impact on State or local governments; (9) recordkeeping and
reporting requirements; and (10) enforcement provisions. It includes a preamble, which supplies the background and
support for the regulation, and the regulatory language.
4.2.2 The Preamble Portion of the Notice of Proposed Rulemaking
The preamble presents a succinct history of the rule and includes, among other elements, a description of the action being taken in the rulemaking that addresses what the action is, why the action is necessary, and what the
ͣ
.i^gsr-"^ wp«- i^-sr-^^¥Sf,?7'"' "^ 'Vi»rr>.',r
69 includes sections that address the various administrative
requirements that agencies must follow in order to issue regulations. These requirements include setting up a public docket for the proposed rule, announcing opportunities for public hearings following publication of the proposal, and assessing the likely impacts the rule would have on the economy of the United States. Other elements of the preamble are listed in Figure 18.
4.2.3 Rulemaking Dockets
The EPA's rulemaking dockets are a major access point through which the public may obtain information to make
informed decisions on environmental issues. The docket is
an organized and complete file, available to the public, of all the information submitted to or otherwise considered by the agency in the development of the proposed (or final) rulemaking. Section 307 of the Clean Air Act requires that for any rulemaking a docket be established that contains:
(1) the factual data on which the proposed rule is based; (2) the methodology used in obtaining and analyzing the data; and (3) the major legal interpretations and policy considerations underlying the proposed rule. The docket is also intended to stimulate private-sector participation by assuring participants that their comments will become part of the public record. A detailed list of the contents of a
70 Figure 18
Contents of the Presunble
Portion of a Notice of Proposed Rulemalclng
The name of the agency proposing the rule.
The title and part numbers in the CFR where the rule would be codified.
A statement of the subject (content of the document). A statement of the action being taken (i.e., proposed
rule and opportunity for pxiblic hearing) .
A brief summary of the action being taken that addresses what action is being taken, why the action is necessary,
and what is the intended effect of the action.
The name and telephone number of the principal project officer who may be contacted for further information. Addresses any participant needs to know to mail comments,
attend public hearings, or examine public documents related
to the action.
A section called "supplementary information" that provides a detailed discussion of the rationale for the proposed rule. A complete statement of the statutory authority behind the
action that mentions all applicable statutory sections.
Administrative sections that address the potential economic
impacts of the regulation.
Source: "Regulatory Procedures Manual," U.S. EPA, Office of
Air Quality Planning and Standards, Emission Standards Division, January 1992.
71
lists of items included and excluded from rulemaking dockets for ESD's regulations are included in Appendices H and I.
4.2.4 The Regulation Portion of the Notice of Proposed
Rulemaking
The second part of NPRM is the regulation itself. The regulatory portion of the NPRM presents the regulatory text that will ultimately be codified in the CFR. The regulatory text for a NESHAP developed by EPA typically includes: (l) applicable definitions; (2) specific requirements of the standard that must be complied with; (3) specific
recordkeeping and reporting requirements; (4) enforcement provisions; and (5) other compliance requirements (such as test procedures). The regulatory text for the proposed general provisions includes all of this information except requirements of the standard that would apply to a specific category of stationary sources.
4.3 Burden Analyses for Federal Regulations 4.3.1 Information Collection Request
During the development of regulations, EPA must obtain approval from 0MB for some of its activities. Several types of burden analyses are required of all proposed and final rules. For instance, as required by the Paperwork Reduction Act (PRA) (44 U.S.C. 3501 et seq.), 0MB must clear any
reporting and recordkeeping requirements that qualify as an "information collection request" (ICR) under the PRA. Under
72 Figure 19
Contents of the Rulemaklng Docket
In general, the rulemaking docket contains all information
considered by the Agency to be relevant to its rulemaking. In addition, the Agency dockets contain administrative information that affects the public use of docket materials, including a coitprehensive index of all
materials contained in the docket.
The rulemaking docket includes but is not limited to:
• A copy of each proposed rule, final rule, or other rulemaking notice for a regulatory action signed by the Administrator, or the
Assistcuat Administrator in the case of a supplemental or correction notice.
• All documents cited in the Federal Register notice such as Background Information Documents (BID).
• Information the Agency considers in drafting the proposed or final
rule, which may include data, analyses, reports, public statements
made by EPA officials, and minutes, summaries, and treuiscripts of
public meetings and telephone calls.
• Public comments, including data, letters, information, and other materials addressed to the Agency during the comment period that are clearly in response to Federal Register notices published by the Agency, as well as public statements made by EPA officials and siammaries and transcripts of public meetings and telephone calls.
• Comments from State agency personnel.
• Any 0MB comments and any comments the 0MB receives from outside
parties on Agency rulemaking actions. These comments are forwarded to EPA through OGC for inclusion in the rulemaking
dockets. Oral communications with 0MB that reveal significaint new factual data or information affecting a rulemaking action are also summarized and placed in the docket.
Source: "Regulatory Procedures Manual," U.S. EPA, Office of Air Quality Planning and Standards, Emission Standards Division,
'-.. -ir6*^'?'S^;^
73
the PRA, EPA must prepare an ICR to explain and justify any
activity that involves collecting information from 10 or
more non-federal respondents.
To obtain 0MB approval under the PRA, EPA must describe
the kind of information to be recorded, frequency of
collection, records to be maintained, reasons for
documenting the information, and the resource burdens that would be placed on industry and government by the
information collection activity. The EPA must prepare this information for each of its regulations (except for exempted
rules and certain special categories) in order to address
whether the reporting and recordkeeping requirements
selected for that rule qualify as an ICR.
4.3.2 Regulatory Impact Analysis
In addition, under Executive Order 12291 (E.O. 12291) , all rules being developed for proposal and promulgation must
be approved by 0MB before publication in the Federal Register. Federal agencies must judge whether the
regulations are "major" or "non-major" for the purposes of
review by 0MB. According to E.O. 12291, major rules are likely to result in annual effects on the economy of $100 million or more and/or result in a major increase in costs
or price for consumers, individual industries, federal.
State or local government agencies or geographic regions and/or result in significant adverse effects on competition.
74
employment, investment, productivity, innovation, or on the ability of United States-based enterprises to compete with
foreign-based enterprises in domestic or export markets.
Significant rules are those that do not meet the criteria
for major rules, but they may have a significant adverse
impact on the public, raise important health or intermedia (e.g., air/land, air/water) issues, have broad geographic
effects, or have substantive impacts on foreign trade or
international relations. A minor rule is one that does not
meet the criteria for major or significant rules.
The classification of a rule as major, significant, or minor determines the scope of regulatory impact (i.e.,
economic) analyses that the agency must prepare for the rule
to demonstrate the burden it would impose on affected
parties, including regulated citizens and the businesses and government agencies that would be responsible for
implementing and enforcing the rule. Under E.O. 12291, a
Regulatory Impact Analysis (RIA) is required for all major rules to present the factual basis upon which the regulation is based and, in general, to compare the expected benefits
of the rule to its expected costs. A detailed list of the contents of an RIA is presented in Figure 20.
•-T=SHSS3BS»'TSjSSs"!^9S»P!«--.-'
75 Figure 20
Contents of a Regulatory Impact Analysis
In general, a Regulatory Impact Analysis (RIA) is required for all "major" regulations and it must include:
Part I: Statement of Potential Need for the Proposal • A detailed description of the problem being addressed. • The basis for the proposed action (i.e., establish that
market failure exists and that a federal regulation is the only adequate way to address the situation).
Part II: Examination of Alternative Approaches
• A discussion of regulatory options considered, including alternative approaches to the problem.
• The Agency's reasoning for eliminating some of the alternatives from further consideration.
Part III: Analysis of Benefits and Costs
• An analysis of the benefits and costs associated with each regulatory option still being considered, including an identification of affected parties, all technical (i.e., economic, cost, engineering) data supporting the regulation, details of the economic analysis, and a description of
models used in the analysis.
Part IV: Rationale for Choosing the Proposed Recmlatorv Action
• An explanation of the reasons for choosing the selected
regulation over the alternatives.
• An identification of legal or technical issues addressed, if any, such as statutory requirements or potential suits or challenges, that may constrain the choice of a regulatory alternative.
Part V: Statutory Authority
• A statement and explanation that the proposed regulatory action is within the Agency's statutory authority.
Source: "Regulatory Program of the United States Government," Office of Management and Budget, J^ril 1, 1991 - March 31, 1992.
76
4.3.3 Regulatory Flexibility Analysis
Finally, the Regulatory Flexibility Act (RFA) of 1980 (Public Law 96-354) requires that a Regulatory Flexibility Analysis be performed for all rules that have "significant impact on a substantial number of small entities." Small entities are small businesses, organizations, and
governmental jurisdictions.
The EPA used to consider a "substantial number" of
small entities to be more than 20 percent of the small entities in the affected industry, and an impact was
considered "significant" if: (1) annual compliance costs increased total costs of production by more than 5 per cent;
(2) annual compliance costs exceeded 10 percent of profits for small entities; (3) the capital cost of compliance represented a significant portion of the capital available to small entities; or the requirements of the regulation
were likely to result in closures of small entities.*^
However, the Agency's latest guidance for implementing the RFA (issued on April 9, 1992) affected a substantial change
to these policies. The Agency now requires that any impact,
however small, on any number of small entities must be
considered. The new Agency guidelines require a two-step
process. First, a screening analysis must be performed to
determine if impacts on small entities are anticipated; and
77
Analysis must be prepared to explore options for mitigating
those impacts.*^
4.4 Burden Analyses for the General Provisions
For the general provisions regulation, ESD was spared the trouble of doing any economic analyses whatsoever. This
topic is worth emphasizing because it is highly unusual for
a regulation not to have to do one or more economic analyses to justify the burden the regulation would likely impose on affected businesses and governments. Typically, as could be
predicted, the economic analyses are a controversial aspect
of the regulatory development process.
The ESD decided not to do an Information Collection
Request analysis under the Paperwork Reduction Act on the grounds that the general provisions regulation does not impose any recordkeeping or reporting burdens on its own. The logic behind this decision hinged on the fact that the general provisions do not take effect until source category- specific standards are developed and promulgated. The
individual standards will incorporate or may override
specific general provisions. In absence of the information needed to characterize all the source categories and sources
that will be regulated under amended Section 112, and in the
absence of the information needed to know what requirements
will be specified in those standards, it is impossible to do
78
reflects the "real world." The ESD argued, at first within
the Agency and later to 0MB, that the PRA burden analysis for the general provisions will take place each time an emission standard is developed. There was no precedent on which to base this argument, since the existing general provisions in Parts 60 and 61 were developed before the ICR
requirement took effect under PRA. So far the argument has
been accepted within the Agency and at 0MB.
Moreover, ESD was not required to do a Regulatory
Impact Analysis under E.O. 12291 or a Regulatory Flexibility Analysis under the Regulatory Flexibility Act because the general provisions are considered only a "significant," and not a "major," rule, and they are not expected to have an impact on small businesses or other organizations until source category-specific standards are promulgated.
4.5 Public Participation in the Rulemaking Process
An important part of the rulemaking process is public participation. The Administrative Procedures Act states that for any federal rulemaking, the public must be
informed, the opinion of the public must be sought, and the issuing agency is accountable for insuring public
participation. Ideally, public participation should not
wait until after the rule has been proposed, but should
begin during the research and information gathering stage. Early participation can garner full public and private
79 sector support, making acceptance of the rule easier and stronger. This involves designing a rule around what the public tells the agency.
Public participation can be sought through a variety of
methods including: (1) advanced notice of proposed
rulemaking (ANPRM); (2) public hearings; (3) request for information (in the Federal Register); (4) letters to
interested parties (up to 9 requests for information do not need prior approval by 0MB); (5) meetings with affected parties and/or public interest groups prior to the NPRM; (6)
articles in trade/professional publications delineating
information needs; (7) consultants; and (8) a public comment period following the NPRM.
By law, following publication of the NPRM in the
Federal Register and the receipt of written or oral comments from the public, the federal agency issuing the proposed rule must provide written responses to all significant comments. (The authors of the regulation decide which
comments are "significant," but all reasonable comments are considered.) Responses to major comments are provided in the preamble to the final rule. No formal guidelines are provided for the content of structure of the agency's response. The agency also may prepare a "response to
comments" document that presents a more complete response to the comments received. The "response to comments" document presents the entire discussion of the agency's response to
80
comments received at a public hearing on the NPRM and during